Oil inches up above $93 despite US growth letdown

Oil prices pushed back above $93 per barrel Monday as sentiment in financial markets was shored up by the formation of an Italian government and expectations of an interest rate reduction from the European Central Bank later this week.

By early afternoon in Europe, benchmark crude for June delivery was up 35 cents to $93.35 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 64 cents to close at $93 in New York on Friday after figures showed the U.S. economy grew by an annualized rate of 2.5 percent in the first three months of the year.

Analysts said the recent run of disappointing U.S. data will likely limit the advance of oil prices.

"Unless the economy picks up, we are unlikely to see any sustained recovery of oil prices," analysts at Commerzbank in Frankfurt said in a note.

Though the global growth picture has largely disappointed of late, investors think it's increasingly likely that the world's leading central banks will maintain their loose monetary policies for a while yet.

And in the case of the European Central Bank, there's an expectation in the markets that the benchmark interest rate will be cut from the current record low of 0.75 percent to 0.50 percent.

A weaker dollar also helped boost oil prices by making crude priced in dollars cheaper for traders using other currencies.

"The euro started to strengthen further, supported by news that a new government is finally in place in Italy and continued hopes that we may get lower interest rates from the ECB later in the week," a report from Sucden Financial Research in London said. On Monday, the euro was up to $1.31 from $1.3065 late Friday in New York.

Brent crude, which is used to price oil from the North Sea used by many U.S. refiners, was down 2 cents to $103.14 on the ICE futures exchange in London.